When you’re ready to put a dental office for sale, one of the first questions dentists ask is “how long does it take?” The answer isn’t quite simple, as there are several factors that contribute to the length of time it takes in selling your small business.
In most dental practice transitions, there are three primary factors that determine how long the sale will take: Location, Annual Gross Collections, and Representation by an experienced dental practice broker.
Location of Your Practice
Like real estate, the age-old adage “LOCATION, LOCATION, LOCATION” is an important factor in determining how long a dental practice sale will take. For example, if your practice is located in a metropolitan area, it could take a broker 6 months to a year to find a qualified buyer. In rural areas, it could take a broker up to three years.
After the seller accepts the buyer’s offer to purchase, the parties will need about two extra months to prepare for the transition. During this time, both parties finalize negotiations and draft the purchase agreement. Tack on an additional month if the sale includes a real estate transaction. Therefore, the healthcare transition specialists at Aptus Exchange highly suggest practice sellers begin their transition planning early.
The Practice’s Annual Gross Revenue
Practices that collect between $600k and $1.2 million are attractive to a majority of buyers. Less than $500k and more than $1.2 million appeal to a much smaller pool of dentists. A young dentist with student loan debt will likely be looking for a practice with large collections but qualifying for financing will be a challenge.
Both lenders and buyers look to a practice’s annual gross revenue over the last three years. While a steady increase in revenue is ideal, buyers would prefer the number to remain steady instead of decline. One thing to take into consideration is doctors on the verge of retirement. They will reduce their work schedule and marketing budget. This could contribute to a decline in annual gross collections and, in effect, the desirability of the practice.
Representation by an Experienced Broker
When you’ve decided to hang your “Dental Office for Sale by Owner” sign, you will likely have two questions in mind:
Will you save time and money selling your practice without a broker?
And
If I want to hire a broker, which broker can I trust?
Each practice broker is different and comes with their own set of skills, experiences, marketing strategies, and expertise. A broker will be able to find qualified buyers, guide the seller through the selling process, and help avoid negative consequences and setbacks.
An experienced broker knows the intricacies of healthcare transitions, helping to secure financing and negotiate on behalf of the client while protecting the integrity of both buyer and seller. When selling your small business, a broker will guide you on what you need to do to maximize the value of your practice.
There is no definitive answer on how long it will take to sell your dental practice. But hiring experienced, professional brokers and planning early are the key to having a quick and stress-free practice sale.
